The January 2022 federal jobs report arrived with optimism. Publications like the New York Times pointed out how 467,000 new jobs beat experts’ predictions. Maybe a turnaround is on the way.
But ADP’s January 2022 National Employment Report splashed cold water on that optimism. Things are still grueling, especially for HR and talent leaders who need to recruit and retain large populations of hourly employees.
Take leisure and hospitality, an industry that’s endured turnover rates as a high as 130% in the past two years. The Bureau of Labor Statistics reports leisure and hospitality expanded by 151,000 jobs in January. But ADP estimates the same industry lost 154,000 employees.
The takeaway: You don’t have control over the Great Resignation. Neither do the analysts. But you do have control over how you respond to it. Right now, millions of hourly employees are desperate to find the company who’ll best support their financial health.
To be that employer, you need to acknowledge how your benefits haven’t kept pace with your employees’ financial realities. When you do, you’ll begin to see what changes you can make to drive the most impact across your recruiting and retention.
Imagine saying to your entire hourly workforce, “We know the last two years have been hard, but don’t worry. New benefits are on the way. They’ll be here in another two years.”
If that sounds harsh, consider things from your employees’ perspective. Nearly 9 in 10 hourly workers (87%) feel financially stressed according to The State of Employee Financial Benefits, a survey report by Wakefield Research and Even.
Consider also that from your employees’ perspective, there is no Great Resignation. To them, this has been coming for a while, as in decades. The cost of necessities has outpaced wages for more than 40 years, including a 4X increase in medical expenses.
Employers know all this financial stress drags down their bottom line, too. A report from Human Resource Executive (HRE) found that 72% of employers agree companies should offer more benefits to relieve employees’ financial stress, especially in the wake of COVID-19.
But despite agreement on both sides that financial relief is needed, not much seems to be happening. HRE found that only 22% of employers have explored new financial benefits enough to 1) establish a budget and 2) know which department will pay for it.
When employees feel you're not moving with urgency on their behalf, they feel like you don’t understand them. Or worse: You do understand them, but you don’t care. Either way, not feeling understood leads to not feeling appreciated, which leads to quitting.
From your employees’ perspective, there is no Great Resignation. To them, this has been coming for a while, as in decades.
Even more challenging for you as an employer, your hourly workers see financial technology exploding around them. They don’t want to hear about the complexities of enterprise payroll. They want to see new benefits that help them keep their cars running, their kitchens stocked with food, and their kids positioned to take advantage of opportunities.
So, in a time when neobanks have figured out how to advance your employees a few hundred bucks between checks, your employees are left asking: “Why is my employer making me wait for my money at all, especially when they know I need it?”
Offering 401(k) is not a financial wellness plan. It certainly isn’t for hourly employees, who need to maximize take-home pay to avoid debt, fees, and penalties when they inevitably have to cover a gap between checks.
And yet 401(k), made possible by the Revenue Act of 1978, is the financial benefit most offered to hourly employees. It’s not even close. HRE found that 71% of employers offer 401(k). After that, it’s wide open:
This mismatch shows why 50% of hourly employees say their benefits don’t fit their financial needs. Yes, your hourly employees aspire to participate in 401(k), but they have plenty of rungs to climb on the financial ladder before they get there. Research by Ernst & Young (EY) shows hourly employees’ most pressing form of financial stress comes from chronic shortfalls due to:
401(k) offers limited value until employees have these stressors under control. Until then, 401(k) adds to hourly employees' financial stress because it leaves them with less cash to work with each paycheck.
Benefits that help toward the beginning of the financial journey are what hourly employees need most. Think benefits like earned wage access (EWA), emergency savings, and automatic budgeting.
Hourly employees need these benefits so badly, they’re seeking out the employers who offer them. Three-quarters (73%) of hourly employees want EWA, and 3 in 5 (57%) would likely leave for a similar job that offered free on-demand pay.
Hourly employees need financial benefits like earned wage access (EWA) so badly, they’re seeking out the employers who offer them.
It’s not about one-off or cafeteria-style benefits, either. Employees want holistic, progressive financial wellness plans. That’s reflected by the 74% of employees who want to work for an employer who offers financial planning, budgeting, and automated savings tools according to the Workforce Institute at UKG.
To win and retain the hourly employees you need, you need to see them as customers. That is, people with a problem. They need to prioritize their financial health more than ever before, but few employers are offering the benefits they need to build lasting financial wellness.
The State of Employee Financial Health Benefits shows you what 1,000 hourly workers at large U.S. employers think of their benefits. You’ll learn how well traditional benefits match their current financial realities (spoiler: not very well). You’ll then gain insights on what changes will drive the most ROI when it comes to recruiting, retaining, and engaging your hourly employees.